One client wanted to acquire 50% of the capital of an existing Swiss real estate company together with another investor through a share deal.
The investment of our client was carried out through a Luxembourg standard taxable company having a holding activity (Soparfi).
The acquisition and holding of a Swiss company by Soparfi is tax efficient on the basis that adequate operational and economic substance is established in Luxembourg.
By application of the participation exemption, Soparfi is exempt from the 24,94% Luxembourg corporate tax on dividend and capital gain on its shareholding in the Swiss company.
Dividend received from the Swiss company may be exempt from the Swiss dividend withholding tax according to the Swiss-Luxembourg tax treaty. The Multilateral Instrument agreement and abuse of law case were also analysed.
